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HMA Set to Start New JV

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Health Management Associates (HMA), a leading operator of general acute care hospitals, recently revealed that its subsidiary has accomplished a fresh joint venture with the Bayfront Health System of St. Petersburg, Florida. The deal went into effect on April 1, 2013. The joint venture will be guided by local reps of Health Management and Bayfront.

Consequently, Health Management now holds an 80% stake in the Bayfront Medical Center. It has also launched a clinical association with Shands HealthCare (a component of UF&Shands, University of Florida Academic Health Center). The remaining 20% stake will be owned by Bayfront Health, Education and Research Organization, which is a non-profit organization.

Health Management is engaged in the ownership and operation of general acute care hospitals in non-urban communities across the U.S. The company is an active acquirer of underperforming hospitals with a turnaround potential in high-growth markets. The company runs 71 hospitals with about 11,000 beds in rural and semi-urban areas across the country. Health Management’s competitors in niche markets include Community Health Systems (CYH).

Health Management benefits from a gradual growth in admissions largely due to improvements in Emergency Room, sustained physician recruitment and service development. Moreover, it is well placed to expand margins from continuing operations and drive above-industry average earnings growth. However, the debt burden for the company remains sizeable.

The stock carries a Zacks Rank #3 (Hold). Given Imaging Ltd. (GIVN) and Cyberonics Inc. (CYBX) are Zacks Rank #1 (Strong Buy) and Zacks Rank #2 (Buy) stocks, respectively, which are expected to do well.

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